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Cottage Industry Definition

Cottage Industry Definition

A cottage industry refers to a small-scale, decentralized manufacturing business that’s usually operated out of a home instead of a purpose-built facility. A cottage industry is defined by the amount of investment needed to start, and the number of people employed in the sector. They always focus on the production of labor-intensive product but also face a major disadvantage when it comes to competing with other factory-based manufacturers in charge of mass production.

A Little More on What is Cottage Industry

Cottage industry usually has a maximum of ten workers. However, generally, it can be concluded that a viable cottage industry has a minimum of ten employees who have vast experience in the type of business that they are required to handle in terms of production. The founder of the given cottage industry must also work in it as a supervisor or team leader. The first cottage industries were based on light manufacturing operations in England as well as the United States. They were subcontracted in the garment-making, sewing, as well as textiles and shoemaking services. They were made of family members who may have been engaged in the businesses of producing finished goods through the utilization of raw materials. As such, the establishment of a micro company may as well be the initial step that an entrepreneur should take toward organizing a project in the cottage industry and take it a step forward. By making it and its activities official, the business professional has the possibility of garnering more credit.

Facts of Cottage Industry

Cottage industries usually play an essential role in the economy of a country. Such economies may lack significant capital as well as financial systems to support their larger industries. As such, it may be complicated for smaller companies to develop due to a lack of capital. It could also be difficult because of uncertainty related to various private properties as well as legal rights. It’s vital also to note that in the cottage industry people find micro-entrepreneurship, which is more of a start-up in business and it allows an individual to be the administrator of the market in which they can carry out using a low-income investment. The owner of the company, as well as the family, is in charge of running the business. In this sense, it implies that there would be three types of micro-businesses namely expansion, transformation as well as survival.

A micro company found in a cottage industry can often be framed in small as well as medium enterprises such as SMEs. These refer to various companies that don’t have a valuable impact on the industry since it doesn’t produce large volumes of products. It also relates to firms whose activities don’t need large sums of capital. Instead, they require predominates. When it comes to determining the significant advantages of the micro company to the community, it would be correct to conclude that its flexibility needs to be mentioned.

It is also vital to indicate that it not only has a rigid structure that helps to prevent decisions as well as actions from being taken quickly but also it adapts well to the market alongside its tendencies and forms of changes. Even so, the cottage industry has its major drawbacks. One of the most fundamental elements that many business professionals have noted is the fact that it’s highly limited to a small market since it doesn’t have the right resources and human labor to attend to it. Moreover, it lacks the vital material that is required for its composition.

Likely, it’s also vital to note that many people would instead not invest in the industry for lack of stable financing. This implies that the industry can’t have the same opportunity as other businesses to grow its technology and expand its presence and scope into other sectors. Beyond that, a cottage is naturally limited in size. Such a company has a valuable impact on the economic life of a country mainly for the vulnerable countries.  This usually occurs because the cottage industry may provide employment opportunities to different people in a country.

References for Cottage Industry

Academic Research for Cottage Industry

  • Proto-industrialization? Cottage industry, social change, and industrial revolution, Houston, R., & Snell, K. D. (1984). The Historical Journal, 27(2), 473-492. This paper analyzes the impact of small-scale and traditional local handicrafts including their existence in rural areas. It was established that in the past decades, dated the fifteenth and the nineteenth centuries; a new economic development swept over many regions with the expansion of the cottage industry. This stage of progress has been termed “protoindustrial”, which is some form of industrialization. It begs to answer the question regarding the purpose of manufacturing and its impact on the community. Proto-industry happened in the countryside when peasant farmers, as well as semi-proletarianized workforces, needed a stream of income.
  • Your life chances affect where you live: A critique of the ‘cottage industry‘of neighbourhood effects research, Slater, T. (2013). International Journal of Urban and Regional Research, 37(2), 367-387. This article was based on evidence established by the author regarding how a person’s life chances affect their environment. While they are the author’s arguments, it’s factual that there is a direct impact of the neighborhood effects on the genre in urban studies. It was argued that the acceptance of where someone stays affects their life chances. The thesis misses the fundamental question regarding why individuals live in certain areas in the city. By analyzing various factors that often contribute to a rise in differential lifestyles and chances, it was concluded that the theory offers a clear understanding of the injustices inherent in allowing the market to be the force that determines the housing cost.
  • Drug trafficking as a cottage industry, Eck, J. E., & Gersh, J. S. (2000). Crime Prevention Studies, 11, 241-272. This article analyzes the structure of illicit drug markets and how they are defined. This is true for illegal markets that often operate at the retail level. In this paper, researchers contrast two key hypotheses regarding how the markets have been structured. At first, it posits an oligopolistic market that’s comprised of a small set of large as well as hierarchically structured distribution networks. The second theory posits a cottage industry of drug trafficking made of small groups of drug traffickers that have formed easily and can also break up easily.  Utilizing information garnered from federal and state local drug investigators in Washington, researchers examined the characters of traffickers investigated between 1995 and 1997. It was concluded using some implications for the control of the wholesale drug markets.
  • Poverty, female labour force participation, and cottage industry: a case study of cloth embroidery in rural Multan, Azid, T., Aslam, M., & Chaudhary, M. O. (2001). The Pakistan Development Review, 1105-1118. This paper analyzes the fact that cottage industries can play a vital role in the establishment and development of various economies with the perfect example being Pakistan. As it was observed in the research, the industry doesn’t need a lot of financing, imported material or advanced technology. As such, issues like a deficit in public finance as well as a balance of systems and payments aren’t related to the development of cottage industries. Also, high levels of female labor force participation in the industry. This has been proved in numerous studies. This seems to be of great importance in the process of reducing poverty in rural areas.

Agriculture and cottage industry: redefining the causes of proto-industrialization, Gullickson, G. L. (1983). The Journal of Economic History, 43(4), 831-850. This article addresses prevailing theory in regards to the subsistence of pastoral agriculture as the main prerequisite for the spread of the protocol industry. It was noted that commercial agriculture, as well as proto-industrialization, are primarily viewed as incompatible. It was concluded that the growth and development of the cotton industry in the pays de Caux, a prominent fertile cereal-producing region situated in Normandy, profoundly contradicts the theory while indicating that seasonal unemployment, as well as landlessness, were the main elements of proto-industrialization.

Mexican migrant-smuggling: A cross-border cottage industry, Spener, D. (2004). Journal of International Migration and Integration/Revue de l’integration et de la migration internationale, 5(3), 295-320. In this chapter, it’s evident that the U.S. has intensified its surveillance in the southern border with Mexico such that the unauthorized migrants have become dependent on smugglers particularly when they cross the border to arrive at their destinations in the U.S. In a report by the immigration as well as Naturalization Service, stricter border controls have systematically changed migrant smuggling into a primary sophisticated profitable industry that’s dominated by large scale criminals.

Rural cottage industry in Brazil, Fernandes Filho, J. F., & Campos, F. R. (2003). Revista de Economia e Sociologia Rural, 41(4), 859-880. This paper argues that in recent years, there has been a debate regarding the development of various rural areas and how it has received significant contributions that address the fact that it’s increasingly important to increase the number of non-agricultural rural activities about agricultural activities and establishments in the Brazilian culture. This is particular in the so-called family agriculture. To weigh in on this debate, the research seeks to analyze the information available regarding the artisanal rural industry. The study has indicated that among other facts, activities related to the artisanal sector are vital when it comes to the supply of the domestic market.

Total quality management, Evans, J. R. (2002). INFOR, 40(4), 364. This chapter presents the total quality management principles and basic tools associated with total quality. It also provides numerous illustrations regarding the end-chapter cases that can be applied as the basis of a classroom discussion regarding various cottage industries and their impact on the community and service industries such as in North and South America, Europe as well as Asia. Total quality management also helps students to analyze parallels between management theories in organizational design as well as leadership.

The evolution of epidemiologic research: from cottage industry to “big” science, Hoover, R. N. (2007). Epidemiology, 18(1), 13-17. This article disintegrates the use of big science in various sectors with a keener look at the cottage industry. The word big science was initially coined to describe multiple transitions in the manner in which science was conducted in various industrial nations during as well as after World War II. Some of the changes that the research highlighted include the assembly of big staffs, which is usually multidisciplinary, to serve in large laboratories using big machines, and utilizing significant updates. The proximal stimulus for the research was the belief that it was the only way through which one could make rapid progress as well as development in a variety of essential defense-related products particularly for the war effort.

The big push, natural resource booms and growth, Sachs, J. D., & Warner, A. M. (1999). Journal of development economics, 59(1), 43-76. This article answers the question regarding the big push and its simple application where reasoning suggests that the use of natural resource booms can be vital catalysts to the development of pioneering countries. The evidence presented has been harvested from seven Latin American countries that have proposed that declining per-capita Gross Domestic Product can accompany natural resourced booms. The research goes on to offer a model with various natural resources and their ability to increase returns in big push models.

The birth rate and cottage industries in underdeveloped countries, Jaffe, A. J., & Azumi, K. (1960). Economic Development and Cultural Change, 9(1, Part 1), 52-63. A lot has been written regarding the characteristics as well as the economic elements of the cottage industry. The literature is full of debate regarding the pros and cons and the desirability of every industry. The purpose of this article is to describe the relationship between various sectors including the birth rate with the aim of drawing useful conclusion and lessons about the problems that may be affecting cottage industries in regards to economic development. As the research dives into the definition, cottage industry is termed as the entire range of gamut economic activities, apart from agriculture, that is conducted near the worker’s home. It is perhaps the widespread activity in light of manufacturing industry.

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